Jefferies has reaffirmed its Buy rating on Boeing (NYSE: NYSE:BA) shares, maintaining a $270.00 price target.
The analyst from Jefferies highlighted the potential impact of the current strike on Boeing's operations, noting that the extent of the effect would depend on the strike's duration.
The company's history shows this is the eighth strike it has faced, with previous occurrences in years such as 1965, 1977, 1989, 1995, and 2005, with varying durations and impacts.
The most recent strike in 2008 lasted for 58 days, leading to delays in 104 deliveries during the third and fourth quarters of that year. The disruption significantly affected Boeing's financials, with sales impacted by approximately $6.4 billion, earnings per share by $1.63, and operating cash flow by $2.5 billion for the year.
The strike translated to an estimated monthly net income hit of roughly $0.6 billion.
The current strike's impact on Boeing is still uncertain, as it is ongoing. The analyst pointed out that the new CEO, Kelly Ortberg, is expected to be proactive in resolving the dispute to minimize operational disruptions.
Ortberg's motivation to return both parties to the negotiating table quickly was emphasized as a key factor in potentially mitigating the strike's impact on the company's operations.
The strike's outcome and its duration remain to be seen, and the analyst's comments reflect the historical data of Boeing's previous labor disputes.
The comparison to past strikes provides a framework for understanding the potential financial repercussions that Boeing may face if the current strike extends over a prolonged period.
Boeing, with nearly a century of operations, has navigated through multiple strikes in the past. The company and its stakeholders are now watching closely as the current labor negotiations unfold, with the aim of reaching a resolution that minimizes the impact on Boeing's production and financial health.
InvestingPro Insights
As Boeing navigates through the challenges presented by the current strike, real-time data from InvestingPro offers valuable insights into the company's financial health. With a market capitalization of $100.29 billion, Boeing's financial metrics reflect its standing in the industry. However, the company is trading at a high EBITDA valuation multiple and has experienced a revenue decline of 0.07% over the last twelve months as of Q2 2024. The gross profit margin during the same period stands at 10.46%, which aligns with the InvestingPro Tip that Boeing suffers from weak gross profit margins.
Investors and stakeholders might also be concerned with Boeing's stock price volatility, as the company is currently trading near its 52-week low and has seen a year-to-date price total return of -37.55%. This volatility is further underscored by the fact that analysts do not anticipate the company will be profitable this year, a sentiment echoed by the basic and diluted EPS from continuing operations sitting at -$5.63 and -$5.64, respectively.
These financial indicators, alongside the InvestingPro Tip that Boeing may have trouble making interest payments on debt, provide context to the potential risks and considerations for investors. For those looking to delve deeper, additional InvestingPro Tips are available, offering a comprehensive analysis of Boeing's financial outlook.
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